Housing costs are a challenge in Ashland – the right energy policies can help.
Here’s some big news:
Beginning in 2025, our city electric utility will have access to $10 million to help homeowners and businesses make energy efficiency and renewable energy upgrades that will reduce their utility bills, improve their living environment, and reduce their climate footprint.
This is great news, and it’s been nearly four years in the making.
The money is coming from the United States Department of Agriculture (USDA) in the form of a zero-percent interest, 20-year loan to Ashland Electric from the USDA’s Rural Energy Savings Program (RESP).
This program is designed to enable Ashland Electric to provide easy, affordable loans of up to $30,000 to building owners for energy-efficient heating, lighting, appliances, and insulation, as well as conversions to more efficient or renewable energy sources.
Utility customers will pay back their energy-efficiency loans through a charge on their electric bills – an arrangement known as “on-bill financing”. The city has actually been offering low-cost on-bill financing since 1998. Staff reported in December 2020 that the city had provided between 7 and 12 on-bill financing loans per year through 2020.
With USDA financing in hand, the City will be able to dramatically expand the availability of low-cost energy efficiency loans.
In addition to the RESP loan roll-out, the City Council has also allocated an additional $1 million in this biennium (which ends June 30, 2025) to energy conservation programs.
We like this.
After all, a large portion of the Electric Fund’s Conservation Program is funded by money paid by Ashland ratepayers. That’s the same community that in 2017 successfully pushed for the City to dramatically reduce our locally generated greenhouse gas emissions and shore up our resilience to climate change.
Applying our resources for conservation initiatives makes total sense to us.
The Affordability Crisis
We also very much like that in October, the City Council requested that City staff explore how Conservation Program funding could be used to assist low- and moderate-income Ashlanders (including renters) and local businesses participate in the clean-energy transition.
The grim truth is that nearly half of Ashland residents – including a whopping 63% of renters – are cost-burdened. This means that they spend more than 30% of their income on housing, including both rent and utilities. Over 25% of renter households in Ashland are severely cost-burdened; they pay more than 50% of their income on housing.
This is a huge problem for our people, and the City is doing a lot of work to determine the best levers within its control to address this crisis. Since we own our electric utility, reducing electric bills for cost-burdened households is definitely a tool we could employ in our toolbox.
On-bill financing can help residents who can’t afford outright purchase of home energy upgrades, but for our cost-burdened residents, a low-interest loan is still a stretch. We need to do more.
So Here’s How We Can Do It
The Ashland Climate Collaborative has developed a number of priority recommendations to help our cost-burdened residents participate in the clean energy transition. Our recommendations are based on our work here in Ashland, as well as our research into other successful state and community-based programs designed to meet similar objectives.
- Recommendation # 1: Provide a more comprehensive free energy assessment for residents and businesses, either directly or under contract with a local nonprofit.
- Recommendation #2: Provide rebates for cost-burdened households as needed to smooth the energy efficiency transition.
- Recommendation #3: Develop programs to assist renters
These recommendations assume that the Council will continue to fund the Conservation Program out of the Electric Enterprise Fund for the coming years– and we strongly advocate that it does so. But even if it doesn’t, these initial conservation funds can provide an important catalyst to get started in a positive direction.
Here are some details behind our recommendations:
Recommendation # 1: Provide a more comprehensive free energy assessment for residents and businesses, either directly or under contract with a local nonprofit.
The home energy assessments currently offered by the City are focused primarily on whether the household qualifies for City conservation incentives. The reviews need to be much broader.
For one thing, the assortment of federal, state, and local government incentives, tax credits, loans, and rebates is downright baffling. It’s exciting that all of these efforts are underway, but it’s changing all the time, and it’s a major project keeping up with it all. With a change in Presidential administration coming up, a lot could change. A bottom-line, after-incentives financial estimate is essential to help residents make decisions..
Skilled navigation services are essential for Ashland residents and businesses to make the most informed decisions about how to upgrade our buildings, and how best to take advantage of the programs out there.
To accelerate the clean energy transition for everyone, and get the most out of our conservation resources, the scope of the assessment should include:
- Information about climate-friendly and energy-efficient electrification. The City should NOT be fuel-neutral. The assessment should include a recommendation that residents and businesses switch from “natural” gas (methane) home energy systems to high-efficiency heat pumps for home heating and cooling and water heating whenever possible. Switching other gas home appliances (i.e., cooktops, fireplaces and dryers) should also be recommended, for various excellent reasons, but these are of a lower priority because these have a smaller effect on utility bills and climate footprint.
- A customized user-friendly report of available City, state, and federal incentives and financing programs that the resident or business is eligible for, and assistance in pursuing them.
- Recommendations for sequencing upgrades to minimize expense.
- Referral to qualified contractors.
Some energy assistance programs offer ongoing basic project management assistance after the assessment to help households and businesses manage the upgrade process. This would be a really valuable service, and it would also allow the City to track the completion of upgrades over time and identify ways to assess and improve programs. This record of energy upgrades should be part of the property record.
The city currently employs one Energy Conservation Analyst/Inspector (currently Dan Cunningham) focused on residential energy assessments. The city also employs a Conservation Analyst (currently Larry Giardina) focused on commercial buildings (including multi-family residential) and solar (residential and commercial). With the RESP loan opportunity, and the urgency of the affordability and climate crises, we need to reach A LOT more households and businesses, with this more comprehensive assessment. We must scale up. These services could be provided in-house by bringing on additional employees, or by contracting with a local organization to perform these services.
This program also needs a marketing and communications budget. The City should actively invite residents and businesses to start the energy assessment and upgrade process, and provide user-friendly resources for moving forward. There are lots of great tools available through Rewiring America and TheSwitchIsOn. The City should also convene local meetings with ODOE staff responsible for the Oregon version of one-stop shopping, a program that has been implemented in Washington and California.
Recommendation #2: Provide rebates for cost-burdened households as needed
Reducing the utility bill component of housing costs through energy efficiency is within our control. Ashland Electric has tiered rates based on usage, but these can end up penalizing our most cash-strapped residents living in the leakiest homes with the least efficient equipment – and ridiculous electric bills. They pay a penalty for outdated systems and drafty homes.
The City has done a good job keeping our rates low while they’re skyrocketing in our neighboring communities. When rate increases become necessary to keep up with rising costs, we recommend that the city implement progressive programs around energy improvements that reduce the price tag of energy upgrades for cost-burdened residents. This will reduce energy bills and bring net zero emission targets into reach for everyone.
For some cost-burdened households, low-cost on-bill financing will not be enough to make energy efficiency investments affordable. The financial analysis portion of the home energy assessment should be designed to deliver a package of loans and rebates that brings the monthly bill down. When financing and current rebates are not enough, the Conservation Fund should close the gap with additional rebates.
The City currently offers a number of conservation incentives, available to everyone regardless of income. This has been a good strategy to encourage and reward early adopters, but we believe it’s time for a reboot.
We encourage the City to direct the majority of its conservation incentives to RESP borrowers and to our cost-burdened households, businesses, and renters.
And while we don’t know the budget for these incentives, we suspect that budget should be at least doubled.
New incentives should also be added to smooth the energy efficiency transition. Top on our list would be incentives or income-qualified rebates to upgrade electric panels to prepare houses before existing gas furnaces or electric resistance heating systems fail.
Inevitably, some equipment will die before it can be replaced, so the City should offer a short-term portable heat pumps loaner program to keep folks warm while they’re waiting for their new equipment.
We can also make solar installation more affordable by developing a program modeled after the Solar for All program implemented by Energy Trust of Oregon in communities served by investor-owned electric utility companies.
To reduce the use of fossil fuels for transportation, the Conservation Fund could also provide incentives to install EV chargers in multi-family units and at schools, and develop an e-bike program for income-qualified renters and homeowners.
Recommendation #3: Develop programs to assist renters
Assisting renters with energy efficiency has been a big conundrum for policymakers. It’s a situation of “split incentives” – the landlord is responsible for purchasing the equipment, but the tenant typically pays the utility costs. Essentially, the landlord has no financial incentive to purchase energy-efficient equipment. This really hurts renters, many of whom are having difficulty making ends meet.
We understand that the RESP loan does not include financing for landlords to make energy upgrades in rental housing. With so many renters in our community, it is imperative that the City work to fill this gap.
The Oregon Rental Home Heat Pump Program offered by the Oregon Department of Energy (ODOE)has cracked this nut. In fact, it was so successful that a second-round of funding was exhausted in a matter of days.
Ashland should borrow elements of this model.
The ODOE program works with landlords to income-qualify tenants, and then offers significant incentives to the landlord to switch from inefficient old-school electric heating systems or gas furnaces to high-efficiency heat pumps. The size of the incentive depends on the efficiency of the equipment and the income level of the tenant. ODOE-approved contractor?s receive the rebate, install the heat pump, and the incentives are taken off the total cost of the invoice after the installation. The city’s low interest on-bill financing program can cover the balance over a generous 10-year term.
Current and future tenants will benefit from this investment.
Another renter-focused initiative that the City should consider is to replace, free of charge, all packaged terminal air conditioners (PTAC) with packaged terminal heat pumps (PTHP) in all rental units with PTACs. A PTAC is a type of self-contained system intended to be mounted through a wall, usually near the floor – it’s the heating and cooling system you often get in hotel rooms, where it’s constantly blasting on and cutting off. A PTHP is far more efficient and comfortable, and will result in an immediate reduction in the electric bill.
Many rental homes have inefficient electric resistance heating systems and gas space heaters. The City could offer landlords a 50-percent rebate for replacing these energy hogs with heat pump mini-splits. An added bonus would be to figure out some way to reduce air leaks through single-pane window systems.
There’s More to Come!
In our next installments, we’ll tell you more about the Ashland policy context and what’s going on in other communities that are trying to address these same issues.
We have a lot of opportunities to move forward!
The Ashland Energy Policy Series is a blog series published by Electrify Ashland Now!, an Action Team of the Ashland Climate Collaborative. The Collaborative is a 501c3 nonprofit organization that serves as a hub for community collaboration to reduce our climate impact and build a more equitable and resilient Ashland.
Special thanks to Ashlanders Rick Barth, Lorrie Kaplan, Ray Mallette, Doug Piper, Ben Scott, Candace Turtle, and Mike Wright for their ongoing work on this initiative.
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